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Creditors Squeeze the Last Drop Out of Oil-and-Gas Companies

By

Matt Jarzemsky

Aug 28, 2015 1:07 pm ET

Cash-starved oil-and-gas companies are getting a lot of mileage out of their assets these days.

A severe slump in commodity prices has sent energy explorers and producers scrambling to shore up their balance sheets, leading to a flurry of debt sales this year by the industry’s most financially strained firms. The new bonds typically promise creditors ownership of the company’s assets, should it default. But in many cases, that claim sits behind the liens of one or even two higher-priority slices of debt.